Business briefs

From Wire Reports

Published Sunday, December 10, 2006

Rayonier to acquire timberland in Texas

JACKSONVILLE -- Rayonier announced that it has agreed to acquire 55,000 acres of timberland in Texas for $121 million from an investment fund advised by Global Forest Partners LP. The transaction is expected to close by year end.

The property is located approximately 70 miles north of Houston along Interstate 45.

Bad loans rising

Delinquencies and defaults of high-risk mortgages rose to their highest levels in five years, roiling mortgage credit and derivatives markets. After two subprime lenders were forced out of business, prices for credit-default swaps sank, driving up the cost of insurance on mortgage-backed securities with below-investment-grade ratings. And analysts warned that more bad news is on the way as falling housing prices wipe out the value of collateral and loans with initially low teaser rates are due to be reset.

Back-office merger

Bank of New York and Mellon Financial will merge, creating the world's largest custodian of financial assets and one of the biggest asset managers. The $16.5 billion transaction aims to capitalize on the fast-growing business of providing back-office services for banks, hedge funds and mutual funds. Bank of New York was founded by Alexander Hamilton, Mellon by the family of another Treasury secretary, industrialist Andrew Mellon.

The big restatement

After a two-year, $1.4 billion effort, Fannie Mae finally restated its earnings for 2002 through June 2004, finding that profits had been overstated by $6.3 billion. The federal regulator who oversees the mortgage lending giant said the restatement was evidence of gross mismanagement and fraud and vowed to sue former chief executive Franklin D. Raines and former chief financial officer J. Timothy Howard to recover bonuses based on inflated earnings. So far, there have been no sanctions against Fannie's auditor, KPMG.

Media swap meet

Two of the cagiest media moguls, Rupert Murdoch and John Malone, are near an agreement to end a two-year standoff. Malone will swap the 19 percent voting stake in Murdoch's News Corp. that he secretly amassed two years ago for News Corp.'s 38.6 percent stake in DirecTV, plus some cash and several regional sports networks. The tax-free exchange, valued at about $11 billion, would eliminate any threat to Murdoch's control of his empire while giving Malone a strong distribution network for Liberty's programming.